Guar Seed Gains On Active Buying.

Guar seed and Guargum futures continued to trade firm for the second consecutive day on account of improved buying by the market participants and ended 1.15% and 0.38% higher respectively on Tuesday. Guar seed spot prices closely traced the futures and ended 0.49% higher yesterday. Special margin of 10% on Guar and Guar gum has been reduced and is effective from April 02, 2011. This also supported prices to strengthen.

According to Agriculture and Processed Food Products Export Development Authority (APEDA) , Guar gum exports during the April- December 2010 surged by 82% and stood at 2,79,197 tonnes.

Arrivals & Production

Arrivals of Guar in the domestic mandis on Tuesday stood at 15,000 bags same as that of Monday.

According to the Rajasthan farm Department, Guar seed output in Rajasthan in the current season is estimated at 14.9 lakh tonnes. The forecasted Indian output this year is much higher than the 4.5 lakh tonnes of 2009-10 and 9.5-10 lakh bags in 2008-09.

India is the largest Guar producing country in the world contributing 80% in total supplies followed by Pakistan with 10% share in world production.

Exports

Indian Guargum exports for the period April- December 2010 stood at 2, 79,197 tonnes as compared to 153404 tonnes during the same period last year. (Source: Apeda & DGFT).

Total exports during the financial year 2009-10 stood at 2,18,460 tonnes. However, in the current year, market participants are expecting exports to cross 3, 00,000 tonnes owing to an increase in demand from the oil sector with the rise in crude oil prices and lower supplies from the second largest Guar producing country, i.e. Pakistan because of floods.

Outlook

Guar futures may trade sideways to up due to recovery in demand from the domestic buyers. In the medium term (1month), prices would be dependent on the overseas demand scenario. Prices are expected to trade in the range of Rs. 2700-3000 per qtl levels in the medium term.

In the long term, the trend in Guar complex would depend on the first long range forecast for the monsoon season 2011 which would be released by the weather department in mid of April.

Source : commodityonline.com